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Federal Reserve Bank of San Francisco
Working Paper Series
Does a currency union affect trade? the time series evidence
Reuven Glick
Andrew K. Rose

Does leaving a currency union reduce international trade? We answer this question using a large annual panel data set covering 217 countries from 1948 through 1997. During this sample a large number of countries left currency unions; they experienced economically and statistically significant declines in bilateral trade, after accounting for other factors. Assuming symmetry, we estimate that a pair of countries that starts to use a common currency experiences a near doubling in bilateral trade.

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Reuven Glick & Andrew K. Rose, Does a currency union affect trade? the time series evidence, Federal Reserve Bank of San Francisco, Working Paper Series 2001-13, 2001.
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Keywords: Foreign exchange ; Trade
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